Silver Falls 6.5% to $49 as Rate Pressures and Tech Selling Intensify
Key Facts
Spot silver fell 6.5% to $49 an ounce in a later update on October 30, breaking below $50 for the first time in 11 months, according to Reuters via MarketScreener. The decline came as technology shares faced pressure and investors worried that spending on artificial intelligence would not generate sufficient returns. In the same session, the Nasdaq fell 2.9%, the S&P 500 dropped 1.8% and the Dow Jones declined 1.1%, according to the Associated Press. EL7 data showed silver closing at $49.276, compared with $52.38 on October 29. The metal’s decline coincided with U.S. inflation data showing a monthly increase in the personal consumption expenditures price index, keeping the interest-rate outlook at the forefront of factors affecting metals.
Reuters linked the selloff to investor concerns that heavy spending on artificial intelligence may not generate sufficient returns. Commerzbank analysts said the stock market decline may have prompted investors to sell safe-haven assets to raise liquidity and triggered margin calls. Treasury yields fell on Friday as investors moved into safer assets, despite higher oil prices, according to the Associated Press. Commerzbank analysts said the drop in precious metals was "exaggerated" and that they still expected prices to recover. But losses in white metals widened during the week ended October 30, with silver, platinum and palladium falling between 7% and 9%. The relative strength index for these metals entered oversold territory for the first time in three years, according to Reuters.
On inflation, the personal consumption expenditures price index rose 0.5% in September, following a 0.3% increase in August, while the core index, which excludes food and energy, rose 0.3% month over month in both months. Year over year, the headline index rose 3.6% in September and the core index increased 3.1%, according to the U.S. Bureau of Economic Analysis. On October 28, the Federal Reserve kept its target interest-rate range at 3.75% to 4%, in a 10-to-2 vote. The two dissenting members preferred a quarter-percentage-point increase in the range. The Fed said economic activity was expanding at a solid pace and inflation remained elevated, and that gathering more information would help the committee determine the appropriate policy stance.
The Fed’s decision came as a Bureau of Economic Analysis estimate showed real gross domestic product growing at an annual rate of 3.4% in the third quarter, up from 2.2% in the second quarter. The bureau attributed the acceleration to increases in investment, consumer spending and government spending, partly offset by a decline in exports, while imports rose. In contrast, Reuters said weak industrial and jewelry demand were weighing on silver. HSBC forecast an average price of $64 an ounce in 2027, down from its forecast average of $71 "this year." In its annual estimate released in February, the Silver Institute also forecast a 2% decline in industrial fabrication in 2026 to about 650 million ounces, and a drop of more than 9% in jewelry demand to 178 million ounces.
Despite expectations of contraction in some demand components, the Silver Institute estimated that the market would remain in deficit for a sixth consecutive year in 2026, with a projected shortfall of 67 million ounces. The annual report forecast a 1.5% increase in total global supply to 1.05 billion ounces. On monetary policy, the Associated Press reported that most economists still expected the Fed to raise interest rates by a quarter point at its next meeting. The Federal Open Market Committee is scheduled to meet on December 8 and 9, 2026, according to the Fed’s calendar. Before then, the Bureau of Economic Analysis scheduled the release of its October personal income and outlays report for November 25 at 8:30 a.m. Eastern time, the next release of inflation data following the September report.